Tanzania: Tax Compliance Assured As EFDs Come Into Effect
1 January 2014
The regulation that requires all business people with an annual turnover of above 14m/- to instal an Electronic Fiscal Device (EFD) comes into effect today. Non-compliers by February 1, 2014 risk prosecution and a maximum one-year jail sentence. Acting Finance Minister Saada Mkuya Salum said in Dar es Salaam that the December 31, 2013 deadline is over and that those resisting the new government move risk being penalised. She cautioned business people who are still planning to boycott use of the devices that in doing so they will be violating the law and may also be prosecuted.
“We are through with bargaining and sensitisation. Now it’s time for action,” Ms Salum said as businesses in Mwanza reportedly closed shops protesting the EFD introduction.
She said effective February 1, defaulters will be given 14 and seven days of grace period before a penalty of 5-10 per cent is imposed on gross turnover for period starting January 1, 2014.
“I urge business people to cooperate and avoid getting into confrontation with the state,” Ms Salum appealed. Deputy Finance Minister Janet Mbene urged local business people to feel proud of paying taxes, noting that many of them have been making millions of shillings in profit while never paying taxes.
“We should reduce the burden of workers who seem to be the only main taxpayers,” Ms Mbene said. She hoped that the EFD machines will eliminate tax evasion and corruption, which has denied both the Treasury and the public revenue and public development project financing respectively. Those who want more time for sensitisation are just playing with time; why don’t people need sensitisation on how to use modern telecommunications gadgets such as iPads, android phones, etc,” Ms Mbene, who is on holiday, inquired.
She urged the public to rally behind the government’s initiative, which will not only help speed up development but also wean the country from donor dependence.
The Treasury had earlier pushed back the deadline for EFD introduction for businesses with over 14m/- turnover from November 15 to December 1, 2013. It also reduced the price of the gadgets from 800,000/- to between 600,000/- and 778,377/- each, according to brand model and capacity. The EFD gadgets, which were introduced in 2010 targeting traders with a turnover of 40m/- per annum, have so far been sold to close to 17,000 traders with an annual turnover of not less than 14m/-.
According to the authority, EFDs bear a fiscal seal, have special inbuilt Read Only Memory (ROM) and incorporate fiscal memory that cannot be erased by use of electromagnetic interface. They also keep 48-hour power back-up and can also use external battery in areas without electricity supply, among some of their unique characteristics. The system aims at allowing the taxman to get correct sales information from business people; reduce tax collection costs and helping business people to comply with the Value Added Tax (VAT) regulations, among others.